| Citibank, N.A. v Silverman |
| 2011 NY Slip Op 04810 [85 AD3d 463] |
| June 9, 2011 |
| Appellate Division, First Department |
| Citibank, N.A., Respondent, v Allen Silverman,Appellant. |
—[*1] Hughes, Hubbard & Reed LLP, New York (Marc A. Weinstein of counsel), forrespondent.
Order, Supreme Court, New York County (Melvin L. Schweitzer, J.), entered January 3,2011, which granted plaintiff's motion for summary judgment in lieu of complaint and referredthe issues of sanctions, interest, and attorneys' fees to a special referee, unanimously modified, onthe law, to delete the issue of sanctions from the issues referred to the special referee, andotherwise affirmed, without costs.
Plaintiff made a prima facie case with respect to the letter of credit on which it seeks torecover by submitting the letter of credit and the forbearance agreement, in which defendantacknowledged his repayment obligations under the letter of credit and the amount thereof (seeCantrade Privatbank AG. Zrich v Bangkok Bank Pub. Co., 256 AD2d 11, 12 [1998]).
Defendant failed to raise a triable issue of fact sufficient to defeat plaintiff's motion withrespect to either the letter of credit or the note signed by him. Even if defendant were to prevailon his claims under the Bank Holding Company Act (BHCA) and the Equal Credit OpportunityAct (ECOA) (15 USC § 1691 [a] [1]), those claims would not prevent plaintiff fromenforcing the note and letter of credit (see Silverman v Eastrich Multiple Inv. Fund, L.P.,51 F3d 28, 33 [3d Cir 1995] [ECOA violation will not void underlying credit transaction]; 12USC § 1975 [remedy for violation of BHCA is treble damages]; see also Cohen vNatif, 202 AD2d 332, 333 [1994], lv dismissed in part and denied in part 83 NY2d996 [1994] [defendant's counterclaims alleging discrimination "are separable from the maincause of action and are not a bar to the entry of judgment in favor of plaintiff" (citationomitted)]).
Defendant does not contend that the note and letter of credit are void due to plaintiff's allegednegligent representation and breach of fiduciary duty. Rather, he contends that he would beentitled to a setoff on the amount due under those documents. Therefore, his negligentmisrepresentation and fiduciary duty claims can be severed (see Midtown Neon Sign Corp. vMiller, 196 AD2d 458, 459 [1993]).
The only claims that would affect plaintiff's ability to bring an action on the note and letter ofcredit are defendant's arguments that plaintiff orally agreed to forbear after the writtenforbearance agreement expired and waived its rights under the note and letter of credit. However,the note, letter of credit and forbearance agreement all contain enforceable provisions to theeffect that they cannot be changed orally (see General Obligations Law § 15-301[1]). [*2]While provisions such as these may be waived (Rosev Spa Realty Assoc., 42 NY2d 338, 343 [1977]), plaintiff repeatedly said that it was notgiving up any of its rights, and we will not presume that it waived them (see Gilbert FrankCorp. v Federal Ins. Co., 70 NY2d 966, 968 [1988]). In addition, while an oral agreement tomodify a written contract will be effective if there has been partial performance thereof that is"unequivocally referable to the modification" (Rose, 42 NY2d at 341), defendant'spayments in April and May 2010 were not unequivocally referable to the alleged oral agreementto forbear. Rather, they were referable to plaintiff's February 2010 proposal, defendant's February2010 counterproposal and the May 2010 loan modification agreement, that was never signed.
Assuming, arguendo, that CPLR 3212 (f) applies to an action commenced under CPLR 3213,defendant's affidavit failed to show that "facts essential to justify opposition may exist but cannotthen be stated" (CPLR 3212 [f]; see alsoGlobal Mins. & Metals Corp. v Holme, 35 AD3d 93, 103 [2006], lv denied 8NY3d 804 [2007]).
The motion court properly dismissed defendant's counterclaim alleging a violation of theBHCA (12 USC § 1972 [1] [C]). When a bank engages in traditional banking practices, itcannot be liable under the BHCA (see B. C. Recreational Indus. v First Natl. Bank ofBoston, 639 F2d 828 [1st Cir 1981]). "The anti-tying provisions [of the BHCA] were notintended to interfere with or impede appropriate traditional banking activities through whichbanks safeguard the value of their investment" (In re Adelphia Communications Corp.,365 BR 24, 76 [SD NY 2007], citing Nordic Bank PLC v Trend Group, Ltd., 619 F Supp542, 554 [SD NY 1985]).
To demand additional collateral from a debtor who is in default in exchange for extendingthat debtor's letter of credit is well within traditional banking practices. Indeed, it iscommonplace (see Federal Deposit Ins. Corp. v Blankinship, 986 F2d 1427 [10th Cir1992] [table; text at 1992 WL 401602, *3, 1992 US App LEXIS 34726, *9 ["As a condition torenegotiating debts, banks can properly require additional collateral and impose other termsdesigned to ensure payment"]). That the demand for additional collateral concerned the propertyof other family members does not take it out of the realm of traditional banking practices (seeSanders v First Natl. Bank & Trust Co. in Great Bend, 936 F2d 273, 278 [6th Cir 1991]).
Defendant's counterclaim for breach of the implied covenant of good faith and fair dealingfails because, as we have found, there was no oral forbearance agreement (see SocieteNationale D'Exploitation Industrielle Des Tabacs Et Allumettes v Salomon Bros. Intl., 251AD2d 137 [1998], lv denied 95 NY2d 762 [2000]). Even if, arguendo, plaintiff orallyagreed to forbear while the parties negotiated, we would still reject defendant's claim of bad faithon the part of plaintiff (see Massachusetts Mut. Life Ins. Co. v Gramercy Twins Assoc.,199 AD2d 214, 218 [1993]).
Defendant's counterclaims for negligent misrepresentation and breach of fiduciary duty alsofail. His conclusory allegations that his relationship with plaintiff was more than that of lenderand borrower and that he relied on plaintiff's advice are insufficient to raise the inference that thisbank-borrower relationship was special (see e.g. Korea First Bank of N.Y. v Noah Enters., Ltd., 12 AD3d321, 323 [2004], lv denied 4 NY3d 710 [2005]). Even if, arguendo, there were aspecial relationship between the parties, defendant failed to raise the inference that he reasonablyrelied on incorrect information imparted by plaintiff (see J.A.O. Acquisition Corp. v Stavitsky, 8 NY3d 144, 148[2007]; Global Mins., 35 AD3d at 99; P. Chimento Co. v Banco Popular de PuertoRico, 208 AD2d 385, 385 [1994]).
Defendant also fails to make a prima facie case of age discrimination under the ECOA. Evenif plaintiff raised defendant's age as an issue during negotiations, it subsequently offered [*3]him a term sheet and a loan modification agreement. As fordefendant's claim of discrimination on the basis of marital status, essentially based on 12 CFR202.7 (d) (5), his own affidavit and his lawyer's affidavit show that plaintiff did not require hiswife to furnish collateral. Rather, plaintiff gave defendant various options, one of which was togive plaintiff a lien against his cooperative apartment that he co-owned with his wife.
Because plaintiff did not seek sanctions, the motion court should not have referred that issueto the special referee. Concur—Gonzalez, P.J., Sweeny, Moskowitz, Acosta andManzanet-Daniels, JJ.